Autumn Budget 2026: What the latest trust and pension changes mean for you

Following a period of significant change to the taxation of trusts and pensions, Autumn Budget 2026 focuses more on refining and clarifying measures already announced rather than introducing major new reforms.

While there were no headline-grabbing structural changes, several measures could have important consequences for trustees, beneficiaries, executors and pension holders if overlooked.

This article highlights the key developments and what they may mean in practice.

Trusts: Relief for accidental UK residence and other key changes

The Chancellor has largely steered clear of wholesale structural changes to the taxation of trusts, opting instead to align existing anti-avoidance regimes with broader developments in the UK tax system.

Transfer of Assets Abroad – From 6 April 2027

The anti-avoidance legislation known as the Transfer of Assets Abroad (ToAA) rules prevents UK-resident individuals from obtaining an income tax advantage by transferring assets to a non-resident person, including a non-resident trust.

Where applicable, tax charges may be levied on settlors or beneficiaries of offshore trusts to ensure that untaxed income remains within the UK income tax charge.

With income tax rates on savings and rental income scheduled to increase from 6 April 2027, an unaddressed mismatch would have emerged between income tax assessed under the ToAA provisions and the tax otherwise suffered by a UK-resident transferor directly.

Finance Bill 2026-27 will make amendments to the ToAA legislation that are intended to ensure the rules continue to work properly once the new savings and property income tax rates take effect. They should also help prevent double taxation where tax has already been paid on the underlying income.

Closing an unintended loophole: Restrictions on deductible liabilities for relevant property charges

Under the existing relevant property regime, calculating ten-year anniversary and exit charges requires an accurate net valuation of the trust assets.

Historically, trustees and practitioners have had to navigate an ambiguous statutory framework regarding when trustee-incurred liabilities could properly be deducted. The new rules, effective for chargeable events occurring on or after 28 October 2026, introduce specific statutory restrictions on the deductibility of certain liabilities.

The changes bring the treatment of trust liabilities more closely into line with the rules that already apply to individuals. Liabilities funded directly or indirectly using value originating from a beneficiary’s own estate will no longer be permitted to depress the value of settled property.

In broad terms, the measure is intended to prevent arrangements that artificially reduce the value of trust assets for inheritance tax purposes.

These rules may adversely impact trusts with existing debt structures, and trustees should review existing borrowing to establish whether deductions remain legally robust under the new statutory standard.

Administrative relief for accidental UK-resident trustees

One of the more welcome announcements for internationally mobile families is a new relief for trusts that inadvertently become UK resident.

Under current rules, if an offshore trust temporarily becomes UK resident, which can happen, for example, where an individual trustee temporarily moves to the UK, a subsequent cessation of UK residency triggers a deemed market-value disposal of all trust assets.

Autumn Budget 2026 introduces a targeted relief whereby no CGT exit charge will arise where a trust becomes UK resident solely as a consequence of an individual trustee becoming UK resident, provided the trust ceases to be UK resident later in that same tax year or during the subsequent tax year.

This provides a vital grace period for multi-jurisdictional families and professional trust companies to restructure trustee boards without incurring unexpected dry CGT charges.

Pensions: Resolving operational complexities ahead of April 2027

The announcement in Autumn Budget 2024 that unused pension funds and certain death benefits would be brought within the scope of inheritance tax from 6 April 2027 created considerable uncertainty for pension savers and their families.

The latest Budget does not reverse that decision, but it does introduce a number of practical measures intended to make the new regime easier to operate.

Administrative easements for executors and death benefit beneficiaries

The Chancellor has introduced welcome procedural easements for personal representatives. Notably, from 6 April 2027 pension scheme administrators will be permitted to settle inheritance tax directly with HMRC. This should help reduce situations where executors need to find funds elsewhere in the estate before inheritance tax can be paid.

Additional flexibility has also been afforded to recipients of lump-sum death benefits. Where the benefit exceeds the Lump Sum and Death Benefit Allowance, the excess will no longer be treated as general pension income under PAYE. Instead, the government has introduced a standalone HMRC assessment process for collecting tax due where the allowance is exceeded, providing greater certainty for beneficiaries.

Further administrative constraints have been lifted regarding the two-year distribution window for lump-sum death benefits. Effective for payments made on or after 28 October 2026, qualifying death benefits will no longer become taxable solely because payment is made more than two years after the member's death. This should be particularly helpful where probate, disputes or overseas assets delay the administration of an estate.

Although the Budget introduces relatively few major structural changes, it contains several measures that could affect trustees, families, executors and pension holders in practice.

Anyone involved with a trust, estate or pension arrangement should consider whether these changes affect their planning, reporting obligations or future inheritance tax position. An early review can help identify opportunities and avoid unexpected tax consequences.